Matching (or job-matching) is the process whereby a firm and a worker meet, learn whether their characteristics combine productively and, in light of this information, sequentially contract a wage and decide whether to separate or to continue production. This hypothesis implies that wages rise and the risk of separation declines with seniority, wage changes are unpredictable and have declining variability, and valuable specific human capital is accumulated in the form of knowledge about the quality of the match. These and other observable implications have found strong support in available empirical evidence, and make job-matching a central theory of worker turnover.
Bellman equation Job-matching hypothesis Labour-market contracts Matching Matching markets Returns to tenure Roy model Selection Wage distribution Worker turnover
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